Major Changes Coming to the Labour Protection Act
As recently as last month, the Cabinet approved in principle the various amendments to the Draft Labour Protection Act (the Draft) in addition to the amendments already made to the Labour Protection Act (the Act), updated in our previous client’s alert. The previous amendments on retirement and work regulations provisions were published in the Royal Gazette and have become effective since 1 September 2017.
New amendments to be made to the Act aim to provide additional benefits to employees. Significant changes found in the new Draft thus far include:
- The maximum rate of severance is no longer capped at 300 days of the employee’s latest wage rate for employees with ten or more years of service. A new maximum severance rate has now been capped at 400 days of the employee's latest wage and applies to employees with 20 or more years of service.
- Business leave of at least 3 days per year with pay has now been set as the minimum number of business leave days for all employees. Currently, the Act only requires that employer arrange for a certain number of days of business leave for the employee with or without pay as the employer deems appropriate.
- Maternity leave has now been clarified to include leaves taken to visit doctors for pre-natal and post-natal care.
- Severance and special severance pays must be paid upon the employment cessation effective date. This is also in line with the Supreme Court’s decisions on this same issue.
- An interest rate in a case the employer defaults on the below payments will be 15%, as opposed to the current 7.5%:
- Payment in lieu of advance notice; and
- Payment in case the employer has to temporarily cease its business operation.
- Change of employer will require an employee's consent and the new employer must assume existing rights and obligations of the previous employer.
- Payment in lieu of advance notice must be paid upon the termination effective date.
- Employees whose normal living or whose family's normal living is substantially affected by the employer's relocation of its premise, whether the new premise is an existing or a new one, is entitled to resign and receive a severance pay.
- A definition of "remuneration" is introduced into the Draft as "the payment made by the employer to the employee in return of the work done under the Act, except wage, overtime pay, holiday pay and overtime holiday pay."
At this stage, there could be further amendments on this Draft, since the Draft was only approved in principle. The Ministry of Labour, Council of the State, the Court of Justice Office and, ultimately, the National Legislative Assembly will have opportunities to review and propose changes to the Draft where appropriate.